Ratings agency Standard & Poor's on Tuesday lowered the credit ratings of BHP Billiton and put it on negative watch, while it also placed Rio Tinto on negative watch, due to challenging market conditions for commodities.

The ratings agency cut BHP's debt to A from A-plus and said a further downgrade by one notch will depend on BHP's dividend policy and capital expenditure guidance due out this month. The move reinforced market speculation the miner will have to lower its payout to shareholders.

"The long rout in commodity prices has hit debt and equity securities issued by metal and mining companies, with many securities looking oversold and therefore attractive if commodity prices do not fall significantly from current levels or stabilize at current levels."